How many are using Automatic contributions?

stocknoob4111 · Post by **stocknoob4111** » Wed Mar 28, 2018 3:57 pm

I just setup automatic contributions from my paychecks 2 times a week - 2nd and 16th so that I have less of a temptation to time purchases. I already contribute to my 401k automatically so I figured automatic contribution to my taxable makes sense as well.

How many here use automatic contributions and have you found that it works better for you or does making contributions manually work better? When making contributions manually does price action influence your decision - say markets are falling hard a particular week so instead of Tuesday you may wait a couple days - probably a bad idea to do this kind of timing but I find it hard to believe the bad news does not affect the best of us!

mhc · Post by **mhc** » Wed Mar 28, 2018 4:03 pm

I have never used them outside my 401k. Sounds like a good idea if your income and expenses are fairly smooth. Mine are rather lumpy, so it would not help me much. I tend to let my checking account build up, then I lump sum invest. This way I can do my rebalancing at the same time.

livesoft · Post by **livesoft** » Wed Mar 28, 2018 4:08 pm

We made automatic contributions from our checking account for many many years while we were in the accumulation phase. We also made manual contributions, too. I couldn't tell you which one worked better for us. Both methods worked just fine for us.

10YearPlan · Post by **10YearPlan** » Wed Mar 28, 2018 7:22 pm

I would say we're like 98% automatic everything-contributions to retirement, taxable, 529, additional mortgage payment...most of that is recurring monthly or twice a month. But when we have any "extra", we will make the occasional additional investment.

For me, recurring is the way to go. Set it and forget it. If I have it to spend first, I will.

anil686 · Post by **anil686** » Wed Mar 28, 2018 7:30 pm

Automatic at the end of the month to avoid buying the dividend in taxable account - it is the biggest reason I like mutual funds for investments...

Amphian · Post by **Amphian** » Wed Mar 28, 2018 7:33 pm

I think automatic contributions work for a lot of people, but I don't use them because I end up investing less that way. I have to set them so they work for the month in which I have the least amount of available money, but I get paid bi-weekly, so twice a year have an extra paycheck, and some months have yearly expenses. (My auto/renter's/umbrella insurance gets paid yearly in order to get a discount.) When I automate savings, I forget to skim off this extra as it builds up. Without automating it, it's part of closing out the month in my budgeting software to ask myself if I need to transfer some money, if I haven't already done so earlier in the month.

ReformedSpender · Post by **ReformedSpender** » Wed Mar 28, 2018 7:36 pm

Auto contributions here for many years. Took the feeling like I ' had ' to out of the equation. Typically make additional manual contributions concurrently each month

ReformedSpender · Post by **ReformedSpender** » Wed Mar 28, 2018 7:37 pm

Duplicate

TheDDC · Post by **TheDDC** » Wed Mar 28, 2018 7:39 pm

I just remember to login and hit buy in my VG account on the 21st of the month. I bought in at a lump sum early this year on the other IRA and look where that got me.

-TheDDC

MotoTrojan · Post by **MotoTrojan** » Wed Mar 28, 2018 7:42 pm

I use ETFs so all I could do is an automatic deposit. For my 401k (soon to have) I'll let that ride auto of course, but for Roth/Taxable I just do it as the cash comes in or I get around to it. I don't have a strict schedule but if there is a RBD or similar down-day, that may prompt me to pull out my spreadsheet which projects expenditures/income for the next few months and see what I can contribute at the moment.

indexonlyplease · Post by **indexonlyplease** » Wed Mar 28, 2018 7:52 pm

I did Auto Contirbutions for 32 years. Now retired. Wife still working and does Auto Contributions.

One changes this year I maxed out both our Roth IRA in January. $6500 x2. I figure just get it overwith in the beginning of the year.

Silverado · Post by **Silverado** » Wed Mar 28, 2018 7:53 pm

Since 1994 i have been making auto contributions. The firm has changed and the amount has increased, but every month without concern.

1994 $167 per month into high load, high fee, low performance uspa-ira IRA. At least i got started.

1998 $167 and $100 to an active small company fund from Berger

2000 $167 still plus $150 To Berger plus $150 to T. Rowe Price international fund

2004 stopped the $167, $250 to Berger/Janus and $250 to TRP, moved IRA to TRP.

2013 Bogleheaded myself up, all funds to index, $800 a month

2017 mortgage paid off, $5000 per month to Vanguard total stock, vtsax.

Another decade and done. Easy.

Sarah Saverdink · Post by **Sarah Saverdink** » Wed Mar 28, 2018 7:58 pm

We have weekly automatic contributions into Vanguard. Keeps us from accumulating too much cash!

AllieTB1323 · Post by **AllieTB1323** » Wed Mar 28, 2018 8:21 pm

Before retirement we had automatic contributions for both the retirement accounts and the two taxable accounts. It kept us from over-thinking (market timing) our purchases. DCA rocks!

badbreath · Post by **badbreath** » Wed Mar 28, 2018 8:40 pm

yes I have in the past but now I do it a bit lumpy due to house being payed off.

UpperNwGuy · Post by **UpperNwGuy** » Wed Mar 28, 2018 9:02 pm

I do it manually, but it is always the same amount and always in the first few days of the month. I suppose I could automate it, but I've never been a fan of automatic payments from my bank accounts. I don't mind the extra work of doing it myself, and it forces me to look at the affected accounts to see if everything is ok.

student · Post by **student** » Wed Mar 28, 2018 9:06 pm

I have doing this for close to 20 years.

wacoach · Post by **wacoach** » Thu Mar 29, 2018 10:08 am

I do both automatic and manual investing. We make automatic weekly investments into the taxable account. This keeps me on a regular cadence of investing and removes any semblance of market timing.

A significant part of my compensation package is annual bonus and stock options, so I make lump sum manual contributions at bonus time and when stock options vest. This is also when I buy iBonds and rebalance across all of our accounts.

260chrisb · Post by **260chrisb** » Thu Mar 29, 2018 10:18 am

The 401K is on autopilot for each pay "event" to get the maximum company match and set to max as is the HSA for the year. I've always hit my Roth with funds 5-6 times a year but never put this or my taxable VG account on auto contribution. I do have a CU savings account that the money comes from and I could do it and then invest from the settlement account but just have not. Perhaps I will and have given thought to it in the past.

F150HD · Post by **F150HD** » Thu Mar 29, 2018 11:13 am

We have weekly automatic contributions into Vanguard. Keeps us from accumulating too much cash!

I could do this too, but, after 10-20 years....that would be a lot of tax lots.

How do folks cope w/ all those....(talking taxable here). Throw in dividends reinvesting....

maybe easier to do 1x a month?

One more reason to max out tax deferred first.

Liberty1100 · Post by **Liberty1100** » Thu Mar 29, 2018 1:47 pm

I have been using automatic contributions for my weekly Roth IRA contributions. Since I get paid weekly, seeing the ~$100 leave my checking account every thursday is barely noticable and yet Vanguard does the math to fulfill my $5,500 limit. I love it.

Texanbybirth · Post by **Texanbybirth** » Thu Mar 29, 2018 1:51 pm

Is it possible for a payroll deduction to wind up directly in your Vanguard brokerage? That would save me one (easy, automated) step every two weeks, but I'm not sure that's a possibility.

aj76er · Post by **aj76er** » Thu Mar 29, 2018 2:20 pm

At Fidelity, you can have payroll deposit directly to brokerage, as all their accounts have routing numbers available.

Not sure about Vanguard.

For many years, I did full automated monthly purchases from my checking account. I really prefer that method because it keeps me from over thinking things.

I've since started using ETFs for taxable due to their increased tax efficiency and ability to use Vanguard products at non-Vanguard brokerage.

In order to not produce too many lots, I tend to lump sum quarterly or semi-annually. I've also started doing back-door Roth and will do an annual lump sum contribution sometime in April or May (with any tax refund and/or bonus at work)

My 401k and HSA are still on auto pilot

onourway · Post by **onourway** » Thu Mar 29, 2018 2:25 pm

F150HD wrote: ↑Thu Mar 29, 2018 11:13 am
We have weekly automatic contributions into Vanguard. Keeps us from accumulating too much cash!
I could do this too, but, after 10-20 years....that would be a lot of tax lots.

How do folks cope w/ all those....(talking taxable here). Throw in dividends reinvesting....

maybe easier to do 1x a month?

One more reason to max out tax deferred first.

Does that really matter today where computers track everything? Even 4 contributions/month for 20 years is less than 1000 lots. Not that big a deal.

F150HD · Post by **F150HD** » Thu Mar 29, 2018 8:59 pm

onourway wrote: ↑Thu Mar 29, 2018 2:25 pm
F150HD wrote: ↑Thu Mar 29, 2018 11:13 am
We have weekly automatic contributions into Vanguard. Keeps us from accumulating too much cash!
I could do this too, but, after 10-20 years....that would be a lot of tax lots.

How do folks cope w/ all those....(talking taxable here). Throw in dividends reinvesting....

maybe easier to do 1x a month?

One more reason to max out tax deferred first.
Does that really matter today where computers track everything? Even 4 contributions/month for 20 years is less than 1000 lots. Not that big a deal.

its not about the computer tracking it....when you sell in 20 years, you'll have to list each of them on your tax forms.

StevieG72 · Post by **StevieG72** » Thu Mar 29, 2018 9:37 pm

Weekly to taxable, set it and forget it....

mpsz · Post by **mpsz** » Thu Mar 29, 2018 10:48 pm

I contribute to my 401k and HSA through payroll, so these are automatic every two weeks.
I use Vanguard's auto-max feature for my Roth IRA, every two weeks, drawn from my checking account.

I contribute to my taxable account in a roundabout way. I keep $x,000 in my checking account at all times. Any amount above this goes to my emergency fund checking account. Each year in January, I set my monthly taxable account contribution of 1/12 the amount in excess of what I want in my emergency fund. Yeah, this technically reduces my return but it's a "high-interest" account and I don't mind having a bit of extra liquidity.

F150HD wrote: ↑Thu Mar 29, 2018 8:59 pm its not about the computer tracking it....when you sell in 20 years, you'll have to list each of them on your tax forms.

You can buy tax software on sale for $15 that will import this data. It's really not a big deal.

F150HD · Post by **F150HD** » Fri Mar 30, 2018 6:00 am

mpsz wrote: ↑Thu Mar 29, 2018 10:48 pm

You can buy tax software on sale for $15 that will import this data. It's really not a big deal.

Yes am aware of that as I've done it. But in 20 years listing 1000+ transactions in your taxes (depending how its liquidated), then having to double check each one for capital gain/loss.....and you should double check. HRB didn't import a few of my gains/losses correctly in the past so I had to edit them.

Point was a way to minimize the number of tax lots if one is investing in taxable to save headaches.

Hillview · Post by **Hillview** » Fri Mar 30, 2018 8:31 am

We did automatic 401k and IRA for the last 10 years -- this year it is now going to taxable not IRA). "The Automatic Millionaire" is in interesting read on this topic.

LOLC2k · Post by **LOLC2k** » Fri Mar 30, 2018 8:42 am

I do IRA ASAP, in a lump sum. HSA and 401k are payments that come out of my paycheck. I set up emergency funding as needed, no point in automating that. I do not yet have a brokerage account, I can't justify that while still setting up my emergency fund.

If I open a solo 401k it will solely be to try and fill up that 18,500 bucket of my 401k as I'm not going to be able to just from my job most likely. And I will not contribute to it until January of the following year to fill up whatever's left (I work different hours/shifts every week so my paycheck is different every week. Makes estimating impossible for the 18,500).

onourway · Post by **onourway** » Fri Mar 30, 2018 8:59 am

IRA contributions were made automatic when I graduated college. 401k contributions automatic since my first real job a couple of years later. Between those two I got to 7 figures by my late 30's without ever missing a cent of the saved money. Most of that time I couldn't have told you how much I had within 50% of reality. I wish I'd saved more.

We continue to do my 401k, her 403b, HSA, 529, and taxable automatic every month. If I have extra money I invest more in taxable. Backdoor Roths are done either as lump sums as available or by conversion of taxable funds as needed.

goingup · Post by **goingup** » Fri Mar 30, 2018 9:00 am

Yes, been automating purchases for many years. Set up now for quarterly purchases, on non-dividend quarters.(All dividends are reinvested.) Fewer lots that are larger amounts work fine for us as late-stage accumulators.

After seeing how well it worked for 401K/403Bs, I think of automatic purchases as a stealthy well-building scheme. Left to my own impulses, I hesitate when I should purchase, but automated purchases execute while I mull and hesitate.

DrewDogs63 · Post by **DrewDogs63** » Fri Mar 30, 2018 9:12 am

I have Automatically Contributed to 401Ks for last 10 years. I Max our Roth IRAs within the first couple weeks of the year. So if there is a drop in a day on one of those first two weeks, it reminds me and I go in and contribute on that day. Although I am considering to make this automatic so I can just forget it and focus on other parts of my life.

As for taxable account, I just dump money in whenever I feel like it.

b.lock · Post by **b.lock** » Fri Mar 30, 2018 9:20 am

I do automatic into my 401k, and I also set Fidelity up to do automatic deposits into my Roth twice a month. Once the Roth is full I change the scheduled contributions so that they go into taxable instead. I like it a lot.

dandinsac · Post by **dandinsac** » Fri Mar 30, 2018 9:25 am

I have automatic contributions weekly to my HSA, my 401K, my Roth IRA, and my wife’s IRA. All purchases are in stock funds - S&P 500, Extended Market, International Developed, and Emerging Market. Each month, if I am > $15,000 above my stock target, I sell $10,000 of my S&P 500 fund and buy bonds inside of an IRA. I rebalance stock percentages every 3 months.

CyclingDuo · Post by **CyclingDuo** » Fri Mar 30, 2018 9:48 am

stocknoob4111 wrote: ↑Wed Mar 28, 2018 3:57 pm I just setup automatic contributions from my paychecks 2 times a week - 2nd and 16th so that I have less of a temptation to time purchases. I already contribute to my 401k automatically so I figured automatic contribution to my taxable makes sense as well.

How many here use automatic contributions and have you found that it works better for you or does making contributions manually work better? When making contributions manually does price action influence your decision - say markets are falling hard a particular week so instead of Tuesday you may wait a couple days - probably a bad idea to do this kind of timing but I find it hard to believe the bad news does not affect the best of us!

We use automatic contributions from checking to saving twice a month (when the bi-monthly paychecks are deposited) into what we call our vacation savings fund. Investment wise, outside of the monthly automatic 403b/457b contributions at our places of employment, we also have an automatic contribution from our checking to Vanguard Brokerage (taxable account), and have an automatic monthly contribution to an investment account set up with 6 ETF's using the modern portfolio theory (possible new car purchase fund that is 10-15 years away, possible who knows what fund). Both of those taxable automatic investments are set it and forget about it type of investments using the pay yourself first methodology, and are about the same cost as a couple of decent meals out per month. Up to this point in our lives, we've been too busy to do any of this on a manual basis, so doing it automatically has given us more time to find our car keys, look for where we left our iPhones, remember where we left our gloves, do the dishes, cook, socialize and ride bikes.

I don't presume to be able to time the market any better than random choice, so the automated contributions and reinvestment of dividends is acceptable for our needs and goals.

djheini · Post by **djheini** » Fri Mar 30, 2018 10:15 am

Texanbybirth wrote: ↑Thu Mar 29, 2018 1:51 pm Is it possible for a payroll deduction to wind up directly in your Vanguard brokerage? That would save me one (easy, automated) step every two weeks, but I'm not sure that's a possibility.

Yes, if you go into Vanguard's website (under Account Maintenance), you can set up direct deposit, and can even choose for the money to automatically be invested in funds you already own. That's one thing I miss about Vanguard as a brokerage instead of Fidelity, where you can just direct deposit it as cash in your brokerage account and then manually have to buy funds with it.

goingup · Post by **goingup** » Fri Mar 30, 2018 10:18 am

CyclingDuo wrote: ↑Fri Mar 30, 2018 9:48 am
stocknoob4111 wrote: ↑Wed Mar 28, 2018 3:57 pm I just setup automatic contributions from my paychecks 2 times a week - 2nd and 16th so that I have less of a temptation to time purchases. I already contribute to my 401k automatically so I figured automatic contribution to my taxable makes sense as well.

How many here use automatic contributions and have you found that it works better for you or does making contributions manually work better? When making contributions manually does price action influence your decision - say markets are falling hard a particular week so instead of Tuesday you may wait a couple days - probably a bad idea to do this kind of timing but I find it hard to believe the bad news does not affect the best of us!
We use automatic contributions from checking to saving twice a month (when the bi-monthly paychecks are deposited) into what we call our vacation savings fund. Investment wise, outside of the monthly automatic 403b/457b contributions at our places of employment, we also have an automatic contribution from our checking to Vanguard Brokerage (taxable account), and have an automatic monthly contribution to an investment account set up with 6 ETF's using the modern portfolio theory (possible new car purchase fund that is 10-15 years away, possible who knows what fund). Both of those taxable automatic investments are set it and forget about it type of investments using the pay yourself first methodology, and are about the same cost as a couple of decent meals out per month. Up to this point in our lives, we've been too busy to do any of this on a manual basis, so doing it automatically has given us more time to find our car keys, look for where we left our iPhones, remember where we left our gloves, do the dishes, cook, socialize and ride bikes.

I don't presume to be able to time the market any better than random choice, so the automated contributions and reinvestment of dividends is acceptable for our needs and goals.

Cycling Duo-
Is it possible to automate ETF purchases at Vanguard??

Bhairston2018 · Post by **Bhairston2018** » Fri Mar 30, 2018 11:22 am

Auto invest every week. I max my Roth first week of January. The rest of the funds are auto invested into Prime Money market fund for the entire year about $115 per week.

kaudrey · Post by **kaudrey** » Fri Mar 30, 2018 1:47 pm

Every payday money automatically goes to savings; once a month money automatically gets transferred to my brokerage account.

CyclingDuo · Post by **CyclingDuo** » Fri Mar 30, 2018 2:53 pm

goingup wrote: ↑Fri Mar 30, 2018 10:18 am
CyclingDuo wrote: ↑Fri Mar 30, 2018 9:48 am
stocknoob4111 wrote: ↑Wed Mar 28, 2018 3:57 pm I just setup automatic contributions from my paychecks 2 times a week - 2nd and 16th so that I have less of a temptation to time purchases. I already contribute to my 401k automatically so I figured automatic contribution to my taxable makes sense as well.

How many here use automatic contributions and have you found that it works better for you or does making contributions manually work better? When making contributions manually does price action influence your decision - say markets are falling hard a particular week so instead of Tuesday you may wait a couple days - probably a bad idea to do this kind of timing but I find it hard to believe the bad news does not affect the best of us!
We use automatic contributions from checking to saving twice a month (when the bi-monthly paychecks are deposited) into what we call our vacation savings fund. Investment wise, outside of the monthly automatic 403b/457b contributions at our places of employment, we also have an automatic contribution from our checking to Vanguard Brokerage (taxable account), and have an automatic monthly contribution to an investment account set up with 6 ETF's using the modern portfolio theory (possible new car purchase fund that is 10-15 years away, possible who knows what fund). Both of those taxable automatic investments are set it and forget about it type of investments using the pay yourself first methodology, and are about the same cost as a couple of decent meals out per month. Up to this point in our lives, we've been too busy to do any of this on a manual basis, so doing it automatically has given us more time to find our car keys, look for where we left our iPhones, remember where we left our gloves, do the dishes, cook, socialize and ride bikes.

I don't presume to be able to time the market any better than random choice, so the automated contributions and reinvestment of dividends is acceptable for our needs and goals.
Cycling Duo-
Is it possible to automate ETF purchases at Vanguard??

No. My ETF account with automatic purchases is elsewhere. You would have to have automatic transfers to Vanguard into a money market/cash fund, and then manually purchase shares.

heyyou · Post by **heyyou** » Fri Mar 30, 2018 4:23 pm

No choice but automatic in my 401k for 25 years, then the contributions continued throughout the year as after-tax ones when the 401k was full. That seems to have worked out okay, I retired at age 55. Somehow luck often happens to those who save more than others. Maybe it is just time in the market for those larger, earlier contributions in the first decade of saving.